Correlation Between Financial Industries and Multi Asset

Can any of the company-specific risk be diversified away by investing in both Financial Industries and Multi Asset at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Financial Industries and Multi Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Financial Industries Fund and Multi Asset Real Return, you can compare the effects of market volatilities on Financial Industries and Multi Asset and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Financial Industries with a short position of Multi Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Industries and Multi Asset.

Diversification Opportunities for Financial Industries and Multi Asset

0.56

Correlation Coefficient

Financial Industries  Multi Asset

Very weak diversification

The 3 months correlation between Financial and Multi is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Financial Industries Fund and Multi Asset Real Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Asset Real and Financial Industries is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Financial Industries Fund are associated (or correlated) with Multi Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Asset Real has no effect on the direction of Financial Industries i.e., Financial Industries and Multi Asset go up and down completely randomly.

Pair Corralation between Financial Industries and Multi Asset

Assuming the 90 days horizon Financial Industries is expected to generate 5.89 times less return on investment than Multi Asset. But when comparing it to its historical volatility, Financial Industries Fund is 1.48 times less risky than Multi Asset. It trades about 0.03 of its potential returns per unit of risk. Multi Asset Real Return is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,056  in Multi Asset Real Return on May 19, 2025 and sell it today you would earn a total of  220.00  from holding Multi Asset Real Return or generate 10.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Financial Industries Fund  vs.  Multi Asset Real Return

Financial Industries

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Financial Industries Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Financial Industries is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Multi Asset Real

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Asset Real Return are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Multi Asset may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Financial Industries and Multi Asset

The main advantage of trading using opposite Financial Industries and Multi Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Industries position performs unexpectedly, Multi Asset can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Multi Asset will offset losses from the drop in Multi Asset's long position.

The idea behind Financial Industries Fund and Multi Asset Real Return pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Directory module to find actively traded commodities issued by global exchanges.